Dan Steinbock

Dan Steinbock

About the author:

Dr Steinbock is an internationally recognized expert of the multipolar world. He focuses on international business, international relations, investment and risk among all major advanced economies and large emerging economies. In addition to advisory activities (www.differencegroup.net), he is affiliated with India China and America Institute (USA), Shanghai Institutes for International Studies (China) and EU Center (Singapore). For more, please see http://www.differencegroup.net/. Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore).

While some observers claim China is heading for another property bubble, the big picture is more complex. There are signs of bubble formation in some cities and excessive inventory in others, but there is solid growth in many.

Today, Europe is struggling with a series of old and new challenges. Hard choices can no longer be deferred. For half a decade, Europe has struggled with excessive debt (which remains excessively high), fiscal adjustment (which has failed to revive the continent), systemic banking vulnerabilities (which have not been nullified), and competitiveness challenges (which are worsening due to R&D cuts across the core economies).

The dispute over China's “market economy status” (MES) divides Europe by countries and industries. It stems from China’s 2001 agreement to join the World Trade Organisation (WTO), which Beijing believes required countries to grant MES to China within 15 years – by December this year.

Whether Hillary Clinton, Donald Trump or somebody else takes the White House, pragmatism is likely to be the eventual winner. Dan Steinbock looks ahead to how an American presidency led by either of the two leading contenders will deal with China and Asia, including on matters of trade and geopolitics.

The US-led petrodollar era is being surpassed by a multipolar oil age in the Middle East. The transition is permeated by fundamental change and financial speculation that is penalizing the roles of the US and China in the region.

Only a few years ago, Brazil exemplified the BRIC dream of rapid growth. Now it is coping with its longest recession, loss of confidence, possibly a lost decade. Dan Steinbock explains what happened, and how and when Brazil could restore to its growth.

Instead of boosting growth, the Bank of Japan's negative interest rates will contribute to domestic fiscal deterioration, regional risks, and even global threats. About a week ago, the Bank of Japan’s (BOJ) governor Haruhiko Kuroda said to the parliament: “We are not considering a cut in interest on bank reserves.”

After intensive industrialization, growth deceleration is natural. No nation has enjoyed sustained double-digit growth after industrialization. The real test of resilience is the continued increase of Chinese living standards.

As China’s anti-corruption drive is expanding from the public and corporate sector to financial institutions, some argue that it is hurting economic growth. In reality, it is the rule of law that can ensure China’s resilient growth.

Recent market volatility is neither entirely warranted nor unexpected. In China, it reflects a confluence of forces; but in the US and internationally, international worries are fueling the volatility. On Monday, January 4, China's A-shares plunged by about 7%, whereas the renminbi (RMB) weakened to 6.52 relative to US dollar.

After the plunge of the commodity prices, the US Fed’s rate hikes are paving way for dimmed prospects in many emerging economies. Nigeria is not an exception. Recently, the US Federal Reserve raised interest rates by 25 basis points, taking the first step away from its near-zero interest rate policy. Advanced economies are coping with secular stagnation. Emerging economies are navigating in new uncertainty.

As China’s renminbi has been included in the IMF elite currencies and the Fed has started its rate hikes, conventional wisdom sees the RMB weakening and US dollar strengthening as simple long-term trends. The realities are far more complex, however.